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Business Services quarterly update
Deloitte Corporate Finance LLC | www.investmentbanking.deloitte.com
Q2 2018
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 2
Deloitte Corporate Finance LLC (DCF) US Business Services leadership
Deloitte1 global Business Services network
North AmericaLatin America
David Lam
Vancouver,
Canada
Jorge Brito
Quito,
Ecuador
Reinaldo Grasson
Sao Paulo,
Brazil
Marcos Bazan
Buenos Aires,
Argentina
Europe
Richard Parsons
London,
United Kingdom
Katie Folwell-Davies
London,
United Kingdom
Byron Griffin
London,
United Kingdom
Olivier Magnin
Paris,
France
Claire Deguerry
Paris,
France
Albert Hannak
Wien,
Austria
Charles Bédier
Paris,
France
Fernando Baldellou
Madrid,
Spain
Jose Chimeno
Lisbon,
Portugal
Sascha Mauries
Dusseldorf,
Germany
DCF deals closed by industry2 DCF deals closed by transaction type2 Leading M&A platform3
Mid-Market financial advisor RankNo. of deals
Goldman Sachs & Co 1 190
PwC 2 167
Deloitte 3 165
Morgan Stanley 4 148
JPMorgan 5 146
Rothschild 6 144
KPMG 7 133
EY 8 131
Citi 9 120
Lazard 10 98
Capital Raise
Sellside
Buyside
Advisory
1. Deloitte refers to Deloitte Touche Tohmatsu Limited, its network of member firms, and their related entities. 2. Represents transactions during FY 2018. For certain deals, DCF acted as a subcontractor to a Deloitte
member firm.3. Refers to Deloitte’s global M&A platform. Ranked by number of deals closed during H1 2018. Data accessed
via MergerMarket. Accessed July 10, 2018.
Shingo Kayama
Tokyo,
Japan
Asia
Ivan Wong
Hong
Kong
Yu Dong Yuan
Shanghai,
China
Sung Hoon Oh
Seoul,
Korea
Antonio Solinas
Milan,
Italy
Phil ColacoChief Executive OfficerCharlotte, [email protected]
James MillerManaging DirectorHead of Business ServicesCharlotte, [email protected]
Chris ParidesSenior Vice PresidentCharlotte, [email protected]
14.8%
25.9%
16.7%
5.6%1.9%
Consumer
Industrial
LSHC
TMT
Business Services
Energy & Resources
FinancialServices
74.8%
10.0%
8.2%
7.0%
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 3
Business Services M&A sector coverage
Demonstrated transaction experience
Who we are:
Deloitte Corporate Finance LLC is a leading global middle market M&A adviser. The firm’s professionals have extensive knowledge in the Business Services space and use their experience to help clients maximize value.
In this update:
• Business Services trends
• Economic outlook
• Industry analysis
• Select M&A transactionsAdvertising and Marketing
Staffing and Human Resources
Business Process Outsourcing
Consulting
Education and Training
Transaction Processing
6
9
12
15
18
21
Contacts:
Phil [email protected]+1 704 333 0533
James MillerManaging [email protected]+1 704 731 8230
Chris ParidesSenior Vice [email protected]+1 704 697 5972
Table of contents
▪ Founded in 1947, Donan is one of the largest forensic investigation firms in the United States, with offices across the country and diverse service offerings, including forensic engineering, fire investigation, component testing, litigation support and unmanned aerial vehicle (UAV) services.
▪ DCF assisted Donan in achieving its liquidity objectives and finding a strategic partner for HVAC Forensics going forward.
The undersigned acted as an exclusive financial advisor to
Donan Solutions, LLC.
has been acquired by
Deloitte Corporate Finance LLC
a division of
a portfolio company of
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 4
$ i
n B
illi
on
s
Yo
Y P
ercen
t C
han
ge
Macroeconomic outlook
US Treasury yield curve2
(nominal vs. real)US gross domestic product1
US unemployment rate3 ISM non-manufacturing indexand consumer confidence index4
*An ISM Non-Manufacturing Index value above 50 signals economic expansion.
US corporate profits5 Global segmentation of business process outsourcing6
Business Services sector outlook
59.2%26.2%
7.8%
6.9%
North America EMEA Latin America Asia/Pacific
1. US Bureau of Economic Analysis, https://www.bea.gov, accessed July 3, 2018, data as of June 30, 2018.2. US Department of the Treasury, https://home.treasury.gov, accessed July 3, 2018, data as of June 30, 2018.3. US Bureau of Labor Statistics, https://www.bls.gov, accessed July 3, 2018, data as of June 30, 2018.4. S&P Capital IQ, https://www.capitaliq.com, accessed July 3, 2018, data as of June 30, 2018.5. IBIS World, https://www.ibisworld.com, accessed July 16, 2018, data as of June 30, 2018.6. Gartner, https://www.gartner.com/en, accessed July 17, 2018, data as of December 31, 2016.
$0.0
$5.0
$10.0
$15.0
$20.0
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
$ in
Tril
lion
s
YoY
Percen
t C
han
ge
GDP ($ in Trillions) YoY % Growth (Adj. for Inflation)
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
In
terest
Rate
Real Yield (%) Nominal Yield (%)
200
250
300
350
400
450
500
550
600
4.0%
6.0%
8.0%
10.0%
Job
less C
laim
s (
Th
ou
san
ds)
% U
nem
plo
yed
Initial Jobless Claims Unemployment Rate (%)
55.0
65.0
75.0
85.0
95.0
105.0
115.0
125.0
135.0
48.0
50.0
52.0
54.0
56.0
58.0
60.0
62.0
64.0
Con
su
mer C
on
fid
en
ce
IS
M N
on
-Man
ufa
ctu
rin
g
ISM Non-Manufacturing
(30.0%)
(20.0%)
(10.0%)
0.0%
10.0%
20.0%
30.0%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$ billion % Change
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 5
Business Services sector breakdown and trading statistics1
Public comparables three-year stock market performance2
1. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.2. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.
NASDAQ composite index 52.0%
S&P 500 index 33.3%
Business Services index 65.2%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
Jul-
2015
Oct-
2015
Jan-2
016
Apr-
2016
Jul-
2016
Oct-
2016
Jan-2
017
Apr-
2017
Jul-
2017
Oct-
2017
Jan-2
018
Apr-
2018
Jul-
2018
NASDAQ Composite Index S&P 500 Index Business Services Index
Last Twelve Months NTM
SectorNumber of
companies
% of 52
week high
Median
revenue
CAGR (3 Yr)
Median
LTM
EBITDA
Median
EBITDA
margin
Median
enterprise
value ($)
EV/
Revenue
EV/
EBITDA
EV/
EBITDA
($ in Millions)
Advertising and Marketing 7 84.1 % 5.7 % $1,166.0 14.4 % $10,178.5 1.2 x 8.3 x 7.6 x
Business Process Outsourcing 11 90.9 6.8 417.0 15.3 6,738.0 2.3 13.8 11.7
Consulting 10 95.6 5.6 109.1 11.8 1,503.2 1.4 13.8 12.7
Education & Training 11 92.4 1.5 71.6 17.0 532.1 1.8 12.6 9.7
Staffing and Human Resources 14 91.4 9.1 171.2 4.7 2,968.6 0.5 11.0 9.5
Transaction Processing 14 95.0 12.3 911.1 24.4 12,807.6 5.5 18.6 16.1
Comparable Public Companies 67 93.4 % 7.6 % $342.4 13.1 % $4,566.3 1.6 x 13.9 x 12.3 x
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 6
Advertising and MarketingSector update | Q2 2018
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 7
Advertising and Marketing
Select Advertising and Marketing M&A transactions3
Transaction in focus2
July 03, 2018 – Dealnet Capital Corp. (TSX VENTURE: DLS), announced that it has signed a binding agreement to sell all of the issued and outstanding shares of Impact Mobile Inc., the Company's wholly-owned mobile messaging business, for total cash consideration of $27.5 million to IMImobile Canada Inc., a wholly-owned subsidiary of IMImobile PLC. Approximately $25 million of the total consideration is payable on the closing of the transaction, which is expected to be before July 19, 2018. The balance of the purchase price is due six months from the closing date. On closing of the transaction, the Company's $12 million of senior secured debentures will be redeemed in full.
Advertising and Marketing trend
Driving customer life time value through strategic B2B marketing1
Key players within the B2B advertising and marketing space have heightened their focus on improving customer lifetime value (CLV) in order to reduce attrition rates. Increased utilization of data analysis has enabled marketers to identify actionable patterns that can have a profound effect on businesses’ brand loyalty. These patterns can be used to implement a calculated diversification of consumer engagement, between email, telephonic, and social media marketing. Although useful data analysis can be difficult to implement, many organizations believe it is their best chance at increasing CLV. The interconnected relationship of CLV, consumer engagement, and data analysis will continue to be a crucial area of focus for B2B marketers in 2018.
1. Mike Mothner, “4 B2B Marketing Trends In 2018,” https://www.business2community.com/b2b-marketing/4-b2b-marketing-trends-in-2018-02091176, accessed July 10, 2018.
2. Dealnet Capital Corp., “Dealnet Sells Impact Mobile for $27.5 Million,” https://markets.businessinsider.com/news/stocks/dealnet-sells-impact-mobile-for-27-5-million-1027337139, accessed July 11, 2018.
3. S&P Capital IQ, https://www.capitaliq.com, accessed July 9, 2018. Data as of July 9, 2018.
($ in Millions)
Close date Target/Acquiror Target business description
Enterprise
value
("EV")
LiquidHub, Inc.
Capgemini SE
Web.com Group, Inc.
Siris Capital Group, LLC
Impact Mobile, Inc.
IMImobile Canada Inc.
CommerceHub, Inc.
GTCR, LLC; Sycamore Partners
Callidus Software, Inc.
SAP America, Inc.
April-18 Provides cloud-based digital asset management, brand
management, and marketing fulfillment solutions.
2,425.9 9.6 N/A
May-18 Provides cloud-based e-commerce fulfillment and
marketing solutions for large retailers, consumer brands,
and marketplaces primarily in the United States and
Canada.
1,055.9 9.5 33.1
July-18 Provides services to brands, carriers, and agencies to
support their mobile marketing needs globally.
27.5 2.6 6.9
Pending Provides a range of internet marketing services to small
businesses in North America, South America, and the
United Kingdom.
1,864.3 2.5 12.7
Pending Develops digital customer engagement solutions. $500.0 2.0 x N/A
EV/
Revenue
EV/
EBITDA
x
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 8
LTM
Company (Ticker)
% of 52
Week high
LTM
revenue
LTM
EBITDA
EBITDA
margin
Enterprise
value
($ in Millions)
Cheil Worldwide Inc. (KOSE:A030000) 87.9 3,308.8 10.4 184.8 5.6 1,404.0 0.4 7.6 7.2
Hakuhodo DY Holdings Inc (TSE:2433) 92.5 12,570.3 5.7 568.2 4.5 4,589.1 0.4 8.1 7.5
MDC Partners Inc. (NasdaqGS:MDCA) 41.2 1,496.0 6.1 156.6 10.5 1,414.4 0.9 9.0 6.4
Omnicom Group Inc. (NYSE:OMC) 82.5 15,385.2 0.4 2,351.5 15.3 19,060.3 1.2 8.1 7.7
Publicis Groupe S.A. (ENXTPA:PUB) 80.7 10,843.5 3.3 2,220.3 20.5 18,128.0 1.7 8.2 8.9
The Interpublic Group of Companies, Inc. (NYSE:IPG) 83.3 7,987.7 1.8 1,139.8 14.3 10,052.1 1.3 8.8 7.6
WPP plc (LSE:WPP) 73.7 20,633.1 9.8 3,190.0 15.5 25,594.9 1.2 8.0 7.8
Median 82.5 % $10,843.5 5.7 % $1,139.8 14.3 % $10,052.1 1.2 x 8.1 x 7.6 x#REF!
Mean 77.4 % 5.4 % 12.3 % 1.0 x 8.3 x 7.6 x
NTM
Revenue
CAGR (3 Yr)
EV/
Revenue
EV/
EBITDA
EV/
EBITDA
Advertising and Marketing public comparables1
Advertising and Marketing historical EV/EBITDA multiples2
Return to table of contents
1. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.2. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.
6.0x
7.0x
8.0x
9.0x
10.0x
11.0x
12.0x
13.0x
14.0x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013 2014 2015 2016 2017 2018
Advertising and Marketing S&P 500 Index
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 9
Business Process OutsourcingSector update | Q2 2018
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 10
Business Process Outsourcing
Select Business Process Outsourcing M&A transactions3
Transaction in focus2
April 16, 2018 - SS&C Technologies Holdings, Inc. (Nasdaq: SSNC), a leading global provider of financial services software and software-enabled services, announced the completion of the acquisition of DST Systems, Inc. (NYSE: DST), a leading global strategic advisory, technology, and operations outsourcing company. The addition of DST's financial services and healthcare businesses provides SS&C with additional scale and breadth across institutional, alternative, wealth management and healthcare segments. SS&C will manage approximately 13,000 global clients and delivered pro forma 2017 revenue of approximately $3.9 billion.
Business Process Outsourcing trend
Business process outsourcing in the digital age1
Many players within the BPO space are heavily investing in tech-enabled applications and process enhancement technologies to streamline workflows and increase efficiencies. At the onset, many believed that the as-a-service software business model would entirely replace traditional sourcing services. Instead of as-a-service taking over, the market has grown as a whole. Q2 2018 figures have compelled ISG to take a more bullish stance on the traditional sourcing space, as they have raised the 2018 forecast to 4.4 percent growth. This forecast is a reflection of industry wide confidence to embrace technological advances.
1. The Data Center Journal, “ISG Index: Global Outsourcing Continues to Accelerate, Up 31% in 2Q18m,” http://www.datacenterjournal.com/isg-index-global-outsourcing-continues-accelerate-31-2q18, accessed July 10 2018.
2. SS&C Technologies, “SS&C Completes Acquisition of DST,” https://www.ssctech.com/about-us/news-events/press-releases/press-release/n/949, accessed July 10, 2018.
3. S&P Capital IQ, https://www.capitaliq.com, accessed July 9, 2018, data as of July 9, 2018.
($ in Millions)
Close date Target/Acquiror Target business descriptionEnterprise
value ("EV")EV/
RevenueEV/
EBITDA
April-18 CSRA Inc. Delivers information technology solutions and professional services to its U.S. government customers to modernize legacy systems, protect networks and assets, and enhance the mission-critical functions for war fighters and citizens.
$9,871.1 1.9 x 11.7 x
General Dynamics Corporation
April-18 DST Systems, Inc. Provides technology-based information processing and servicing solutions.
5,671.1 2.6 11.5
SS&C Technologies Holdings, Inc.
February-18 e-Builder, Inc. Develops and provides a cloud-based construction program management solution that manages capital program cost, schedule, and documents through a workflow.
$500.0 9.4 N/A
Trimble, Inc.
February-18 SQS Software Quality Systems AG Provides end-to-end software and business process quality solutions.
418.0 1.1 13.7
Assystem Technologies SA
December-17 PAREXEL International Corporation Operates as a biopharmaceutical outsourcing services company worldwide.
5,007.4 2.4 14.6
Pamplona Capital Management LLP
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 11
Business Process Outsourcing public comparables1
Business Process Outsourcing historical EV/EBITDA multiples2
Return to table of contents
1. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.2. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.
LTM
Company (Ticker)
% of 52
Week high
LTM
revenue
LTM
EBITDA
EBITDA
margin
Enterprise
value
($ in Millions)
Cognizant Technology Solutions Corporation (NasdaqGS:CTSH) 96.3 % $15,176.0 12.2 % $3,158.0 20.8 % $44,127.3 2.9 x 14.0 x 12.2 x
Computershare Limited (ASX:CPU) 94.5 2,229.5 3.7 549.4 24.6 8,244.5 3.7 15.0 12.6
Convergys Corporation (NYSE:CVG) 93.5 2,738.7 (2.9) 342.4 12.5 2,356.2 0.9 6.9 7.1
DXC Technology Company (NYSE:DXC) 80.6 24,556.0 44.6 5,019.0 20.4 30,796.1 1.3 6.1 6.6
ExlService Holdings, Inc. (NasdaqGS:EXLS) 96.3 786.3 14.7 113.0 14.4 1,978.6 2.5 17.5 12.3
Genpact Limited (NYSE:G) 87.5 2,802.8 6.2 417.0 14.9 6,696.1 2.4 16.1 12.6
Sykes Enterprises, Incorporated (NasdaqGS:SYKE) 87.1 1,616.4 6.8 163.1 10.1 1,187.5 0.7 7.3 6.5
Tata Consultancy Services Limited (NSEI:TCS) 99.7 18,659.6 9.2 4,992.3 26.8 106,230.4 5.7 21.3 18.0
TTEC Holdings, Inc. (NasdaqGS:TTEC) 78.6 1,514.3 6.2 188.7 12.5 1,817.9 1.2 9.6 8.4
Wipro Limited (BSE:507685) 82.5 8,008.0 4.5 1,495.4 18.7 15,139.1 1.9 10.1 9.2
WNS (Holdings) Limited (NYSE:WNS) 93.2 777.7 13.1 118.9 15.3 2,536.4 3.3 21.3 17.3
Median 93.2 % $2,738.7 6.8 % $417.0 15.3 % $6,696.1 2.4 x 14.0 x 12.2 x
Mean 90.0 % 10.8 % 17.4 % 2.4 x 13.2 x 11.2 x
Revenue
CAGR (3 Yr)
NTM
EV/
EBITDA
EV/
Revenue
EV/
EBITDA
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013 2014 2015 2016 2017 2018
Business Process Outsourcing S&P 500 Index
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 12
ConsultingSector update | Q2 2018
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 13
Consulting
Select Consulting M&A transactions3
Transaction in focus2
June 25, 2018 - Navigant (NYSE: NCI) and Ankura Consulting Group, LLC announced a definitive agreement under which Navigant will sell its Disputes, Forensics and Legal Technology (DFLT) segment and its Transaction Advisory Services (TAS) practice to Ankura, a leading business advisory and expert services firm. The transaction is valued at $470 million, and is expected to close during the third quarter, subject to customary regulatory approvals and closing conditions. Ankura is a portfolio company of Madison Dearborn Partners (MDP), a leading private equity firm based in Chicago.
Consulting trend
Consulting firms forced to innovate to remain competitive in the digital world1
The consultancy space is undergoing a major upheaval as participants are challenged to meet the ever-growing technological needs of their clients. Commoditization of technical acuity within the consulting industry is increasing the value of highly comprehensive services. These technology trends are forcing consulting firms to adapt and become intensive all-around service firms. The heightened demand for more sophisticated and fully-integrated service offerings from advisory companies is driving premium valuations and consolidation within the sector.
1. Consultancy UK, “Trends and challenges in the management consulting industry,” https://www.consultancy.uk/news/13111/trends-and-challenges-in-the-management-consulting-industry, accessed July 9, 2017.
2. BusinessWire, “Navigant Announces a Definitive Agreement to Sell Its Disputes, Forensics and Legal Technology Segment and Transaction Advisory Services Practice to Ankura for $470 Million,” https://www.businesswire.com/news/home/20180625005392/en/Navigant-Announces-Definitive-Agreement-Sell-Disputes-Forensics, accessed July 11, 2018.
3. S&P Capital IQ, https://www.capitaliq.com, accessed July 9, 2018, data as of July 9, 2018.
($ in Millions)
Close date Target/Acquiror Target business description
Enterprise
value
("EV")
Thoreau Holdco, LLC & Navigant Consulting Ltd.
Ankura Consulting Group, LLC
CH2M HILL Companies, Ltd.
Jacobs Engineering Group, Inc.
TRC Companies, Inc.
New Mountain Capital, LLC
The CJS Solutions Group LLC
Tech Mahindra (Americas), Inc.
CEB Talent Assessment
Gartner, Inc.
3.9 18.4
May-17 Offers healthcare technology consulting services. 220.0 1.9 N/A
April-17 Engages in the development, implementation, and sale of
objective assessment products and services worldwide.
3,680.7
N/A
June-17 Provides engineering, consulting, and construction
management services in the United States.
681.3 1.3 13.9
December-17 Provides engineering and technical construction consulting
services in the United States and internationally.
3,263.1 0.6
EV/
Revenue
EV/
EBITDA
Pending Provides professional services including accounting,
computer forensics, valuation and economic analysis, risk
management, and investigative and compliance advisory
services.
$470.0 1.5 x 11.9 x
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 14
Consulting public comparables1
Consulting historical EV/EBITDA multiples2
Return to table of contents
1. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.2. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.
LTM
Company (Ticker)
% of 52
Week high
LTM
revenue
LTM
EBITDA
EBITDA
margin
Enterprise
value
($ in Millions)
Accenture plc (NYSE:ACN) 98.1 % $38,573.6 7.6 % $6,276.1 16.3 % $103,149.5 2.7 x 16.4 x 14.7 x
Booz Allen Hamilton Holding Corporation (NYSE:BAH) 99.0 6,171.9 5.4 584.8 9.5 8,283.5 1.3 14.2 13.2
CBIZ, Inc. (NYSE:CBZ) 93.1 880.0 6.5 101.0 11.5 1,427.1 1.6 14.1 12.3
CRA International, Inc. (NasdaqGS:CRAI) 91.7 381.4 7.4 26.8 7.0 435.4 1.1 16.2 0.0
Exponent, Inc. (NasdaqGS:EXPO) 92.0 345.7 5.4 87.4 25.3 2,347.3 6.8 26.9 24.2
FTI Consulting, Inc. (NYSE:FCN) 96.5 1,859.2 1.8 220.9 11.9 2,747.6 1.5 12.4 14.3
Huron Consulting Group Inc. (NasdaqGS:HURN) 99.7 737.4 8.9 90.1 12.2 1,331.7 1.8 14.8 13.2
ICF International, Inc. (NasdaqGS:ICFI) 94.4 1,235.6 4.6 113.1 9.2 1,566.3 1.3 13.8 12.5
Navigant Consulting, Inc. (NYSE:NCI) 84.2 947.3 6.1 123.4 13.0 1,138.4 1.2 9.2 9.2
Resources Connection, Inc. (NasdaqGS:RECN) 79.7 654.1 3.5 50.4 7.7 471.9 0.7 9.4 9.9
Median 93.8 % $913.6 5.8 % $107.1 11.7 % $1,496.7 1.4 x 14.1 x 12.8 x
Mean 92.8 % 5.7 % 12.4 % 2.0 x 14.7 x 12.3 x
NTM
Revenue
CAGR (3 Yr)
EV/
Revenue
EV/
EBITDA
EV/
EBITDA
6.0x
7.0x
8.0x
9.0x
10.0x
11.0x
12.0x
13.0x
14.0x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013 2014 2015 2016 2017 2018
Consulting S&P 500 Index
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 15
Education and TrainingSector update | Q2 2018
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 16
Education & Training
Select Education and Training M&A transactions3
Transaction in focus2
January 18, 2018 – Strayer Education, Inc. (NASDAQ: STRA) announced that its stockholders approved proposals to merge with Capella Education Company. This includes an increase in the number of the company’s authorized shares of common stock to 32,000,000; the issuance of shares of Strayer Education, Inc. common stock to effectuate the merger; and the change of the company’s name from “Strayer Education, Inc.” to “Strategic Education, Inc.”
Education & Training trend
The Association for Talent Development (ATD) hosts one of the world’s largest talent development conferences, providing companies the knowledge, strategies, and solutions needed to train and develop their workforce. Logistics for the conference can be found on their website: https://www.td.org
Legacy private equity behemoths establish social impact investment vehicles1
Leading alternative investment management companies are increasingly recognizing the investor demand and yield potential for social impact investing. Just in the past two years, both TPG and KKR have pioneered funds dedicated to investing in and profiting from companies with societal and environmental benefits. Tech-enabled companies that meet these needs may have a competitive advantage in the battle for capital, and both investment vehicles include a sector focus on education services. The proliferation of investment theses focused on education services is expected to spark highly visible M&A activity in the industry through 2018 and beyond.
1. David French and Joshua Franklin, “KKR launches unit focused on impact investing,” http://uk.businessinsider.com/r-exclusive-kkr-launches-unit-focused-on-impact-investing---sources-2018-4?IR=T, accessed July 11, 2018.
2. Business Wire, “Strayer Education, Inc. Stockholders Approve Proposed Merger with Capella Education Company,” https://www.businesswire.com/news/home/20180119005688/en/Strayer-Education-Stockholders-Approve-Proposed-Merger-Capella, accessed July 10, 2018.
3. S&P Capital IQ, https://www.capitaliq.com, accessed July 9, 2018, data as of July 9, 2018.
($ in Millions)
Close date Target/Acquiror Target business description
Enterprise
value
("EV")
Capella Education Company
Strayer Education, Inc.
CEB Talent Assessment
Exponent Private Equity LLP
The Advisory Board Company
OptumInsight, Inc.
Nord Anglia Education, Inc.
Jhana Education, Inc.
Franklin Covey Corporation
Apollo Education Group, Inc.February-17 Apollo Education Group, Inc. provides private education
services in the United States and internationally.
588.6 0.3
Apollo Global Management, LLC; Najafi
Companies; The Vistria Group, LLC
N/A N/AJuly-17 Develops and offers bite-sized, online learning content for
leaders and managers.
10.7
2.2
6.3
September-17 Operates premium international schools. 4,349.0 4.9 24.8
November-17 Provides leading practices research and insight,
technology, consulting and management, and data-
enabled services internationally.
1,300.0 1.6
Canada Pension Plan Investment Board; Baring
Private Equity Asia
EV/
Revenue
EV/
EBITDA
April-18 Provides talent measurement solutions. 400.0 4.1 10.5
Pending x11.5 x1.8 $797.0 Provides online postsecondary education and job-ready
skills services in the United States.
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 17
LTM
Company (Ticker)
% of 52
Week high
LTM
revenue
LTM
EBITDA
EBITDA
margin
Enterprise
value
($ in Millions)
Training
Franklin Covey Co. (NYSE:FC) 78.8 204.5 (1.0) 8.3 4.1 379.4 1.9 45.6 22.4
GP Strategies Corporation (NYSE:GPX) 59.2 511.8 0.8 28.7 5.6 359.0 0.7 12.5 9.6
John Wiley & Sons, Inc. (NYSE:JW.A) 93.4 1,796.1 (0.5) 338.8 18.9 3,985.8 2.2 11.8 10.0
Wilmington plc (LSE:WIL) 72.2 167.2 10.0 30.8 18.4 280.0 1.7 9.1 8.2
Median 72.2 % $511.8 0.8 % $30.8 18.4 % $359.0 1.7 x 11.8 x 9.6 x
Mean 74.9 % 3.4 % 14.3 % 1.5 x 11.1 x 9.3 x
NTM
Revenue
CAGR (3 Yr)
EV/
Revenue
EV/
EBITDA
EV/
EBITDA
Education & Training public comparables1
Education and Training historical EV/EBITDA multiples3
Return to table of contents
1. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.2. Excluded from median and mean calculations.3. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.
2
3.0x
5.0x
7.0x
9.0x
11.0x
13.0x
15.0x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013 2014 2015 2016 2017 2018
Education Training S&P 500 Index
LTM
Company (Ticker)
% of 52
Week high
LTM
revenue
Revenue
CAGR (3
LTM
EBITDA
EBITDA
margin
Enterprise
value
($ in Millions)
Education
American Public Education, Inc. (NasdaqGS:APEI) 98.6 % $298.5 (4.9) % $53.0 17.8 % $546.1 1.8 x 10.3 x 10.0 x
Capella Education Company (NasdaqGS:CPLA) 99.0 440.6 1.4 70.4 16.0 1,064.2 2.4 15.1 11.8
Career Education Corporation (NasdaqGS:CECO) 97.1 582.4 (14.8) 79.4 13.6 1,111.8 1.9 14.0 10.5
Adtalem Global Education Inc. (NYSE:ATGE) 98.9 1,818.9 (1.8) 326.1 17.9 3,049.1 1.7 9.3 10.3
Grand Canyon Education, Inc. (NasdaqGS:LOPE) 98.9 1,001.6 11.7 351.1 35.1 5,477.1 5.5 15.6 18.8
Lincoln Educational Services Corporation (NasdaqGS:LINC) 48.4 258.5 14.7 1.9 0.7 58.2 0.2 30.3 6.6
Strayer Education, Inc. (NasdaqGS:STRA) 98.8 456.4 1.1 72.1 15.8 1,135.3 2.5 15.7 13.8
Universal Technical Institute, Inc. (NYSE:UTI) 87.6 319.4 (5.1) (0.6) N/A 111.1 0.3 N/A N/A
Median 98.7 % $448.5 (0.4) % $71.3 16.0 % $1,088.0 1.9 x 15.1 x 10.5 x
Mean 90.9 % 0.3 % 16.7 % 2.0 x 15.8 x 11.7 x
NTM
EV/
Revenue
EV/
EBITDA
EV/
EBITDA
Quarterly update | Q2 2018 | Business Services
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Staffing and Human ResourcesSector update | Q2 2018
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 19
Staffing and Human Resources trend
Artificial intelligence and machine learning disrupt human capital1
During a time in which it seems technological innovations permeate through every facet of business, artificial intelligence and machine learning have emerged as particularly strong disruptors in the staffing and human capital space. Artificial intelligence and machine learning have enabled organizations to leverage outputs from complex data sets for both hiring and internal utilization purposes. Talent management procedures are expected to continue to evolve and improve along with advancements in data analytics and pattern recognition. Many of the most influential companies and institutions, including Deloitte, are fueling this evolution by investing in artificial intelligence technologies to improve recruiting and internal staffing procedures.
Staffing and Human Resources
Select Staffing and Human Resources M&A transactions3
Transaction in focus2
May 14, 2018 - OMERS Private Equity has agreed to acquire Alexander Mann Solutions, a London-based provider of talent acquisition and management services. The deal, expected to close in the second quarter, is valued at $1.1 billion. The seller is New Mountain Capital, which bought the company in 2013. Established in 1996, Alexander Mann serves more than 100 clients across seven industries in over 85 countries.
1. Abhishek Agarwal, “Changing trends of recruitment,” https://www.thestatesman.com/supplements/career/changing-trends-recruitment-1502660514.html, accessed July 11, 2018.
2. Kirk Falconer, “OMERS Private Equity to buy Alexander Mann in $1.1 bln deal,” https://www.pehub.com/2018/05/omers-private-equity-buy-alexander-mann-1-1-bln-deal-2/, accessed July 11, 2018.
3. S&P Capital IQ, https://www.capitaliq.com, accessed July 9, 2018, data as of July 9, 2018.
($ in Millions)
Close date Target/Acquiror Target business description
Enterprise
value
("EV")
Envision Healthcare Corporation
KKR & Co. L.P.
Alexander Mann Solutions Ltd.
OMERS Private Equity
PeopleFluent, Inc.
Learning Technologies Group plc
ECS Federal, Inc.
On Assignment, Inc.
CareerBuilder, LLC
Apollo Global Management, LLC
Advantage RN, LLC
Cross Country Healthcare, Inc.
N/A
July-17 Provides nurses and healthcare professionals for travel
assignments for hospitals and medical facilities in the
United States.
86.8 0.9 8.7
July-17 Connects job seekers and employers in the United States,
Canada, China, France, Germany, Greece, India, Italy, the
Netherlands, Spain, Sweden, the United Kingdom, and
Vietnam.
627.5 0.9
11.2
April-18 Provides technology services and solutions to United
States federal government agencies.
775.0 N/A N/A
May-18 Provides Software-as-a-Service talent management
solutions.
150.0 1.4
EV/
Revenue
EV/
EBITDA
May-18 Provides talent acquisition and management services to
organizations.
1,106.1 N/A N/A
Pending Provides various healthcare services in the United States. $10,420.0 1.3 x 9.7 x
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 20
Staffing and Human Resources public comparables1
Staffing and Human Resources historical EV/EBITDA multiples2
Return to Table of Contents
1. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.2. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.
LTM
Company (Ticker)
% of 52
Week high
LTM
revenue
LTM
EBITDA
EBITDA
margin
Enterprise
value
($ in Millions)
Diversified Staffing
Adecco Group AG (SWX:ADEN) 73.0 % $29,101.9 5.0 % $1,406.9 4.8 % $11,162.4 0.4 x 7.9 x 7.7 x
Barrett Business Services, Inc. (NasdaqGS:BBSI) 98.5 934.4 11.9 38.4 4.1 691.4 0.7 18.0 14.8
Hays plc (LSE:HAS) 91.2 7,333.1 13.2 328.6 4.5 3,689.4 0.5 11.2 10.1
Impellam Group PLC (AIM:IPEL) 73.8 2,934.8 17.9 70.0 2.4 412.5 0.1 5.9 5.1
Insperity, Inc. (NYSE:NSP) 96.0 3,431.9 12.3 156.2 4.6 3,853.9 1.1 24.7 17.3
Kelly Services, Inc. (NasdaqGS:KELY.A) 71.1 5,454.6 (0.6) 102.6 1.9 886.0 0.2 8.6 0.0
Kforce Inc. (NasdaqGS:KFRC) 97.3 1,370.2 3.2 79.3 5.8 1,007.0 0.7 12.7 9.9
ManpowerGroup Inc. (NYSE:MAN) 63.2 22,281.6 3.8 946.0 4.2 6,102.1 0.3 6.5 6.6
ASGN Incorporated (NYSE:ASGN) 98.1 2,684.6 15.4 294.8 11.0 4,904.6 1.8 16.6 11.9
PageGroup plc (LSE:PAGE) 97.0 1,853.8 9.4 171.4 9.2 2,340.0 1.3 13.7 12.0
Randstad NV (ENXTAM:RAND) 84.7 28,826.9 9.7 1,294.7 4.5 12,041.1 0.4 9.3 8.3
Robert Half International Inc. (NYSE:RHI) 97.0 5,374.8 3.7 590.4 11.0 8,022.3 1.5 13.6 12.7
SThree plc (LSE:STHR) 89.7 1,567.5 13.4 62.0 4.0 564.8 0.4 9.1 7.5
TrueBlue, Inc. (NYSE:TBI) 93.6 2,494.9 2.0 124.5 5.0 1,139.1 0.5 9.1 8.5
Median 92.4 % $3,183.4 9.6 % $163.8 4.5 % $3,014.7 0.5 x 10.3 x 9.2 x
Mean 87.4 % 8.6 % 5.5 % 0.7 x 11.9 x 9.5 x
NTM
Revenue
CAGR (3 Yr)
EV/
Revenue
EV/
EBITDA
EV/
EBITDA
LTM
Company (Ticker)
% of 52
Week high
LTM
revenue
LTM
EBITDA
EBITDA
margin
Enterprise
value
($ in Millions)
Executive Recruiters
Heidrick & Struggles International, Inc. (NasdaqGS:HSII) 89.1 % $641.5 8.8 % $61.5 9.6 % $597.2 0.9 x 9.7 x 8.3 x
Korn/Ferry International (NYSE:KFY) 95.5 1,767.2 19.8 239.8 13.6 3,420.2 1.9 14.3 11.3
Median 92.3 % $1,204.3 14.3 % $150.6 11.6 % $2,008.7 1.4 x 12.0 x 9.8 x
Mean 92.3 % 14.3 % 11.6 % 1.4 x 12.0 x 9.8 x
NTM
Revenue
CAGR (3 Yr)
EV/
Revenue
EV/
EBITDA
EV/
EBITDA
6.0x
7.0x
8.0x
9.0x
10.0x
11.0x
12.0x
13.0x
14.0x
15.0x
16.0x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013 2014 2015 2016 2017 2018
Staffing and Human Resources S&P 500 Index Executive Recruiters
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 21
Transaction ProcessingSector update | Q2 2018
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 22
Transaction Processing trend
Balancing security and convenience within payment processing1
The transaction processing space has been marked by security concerns as successful cyberattacks have instilled a sentiment of wariness in the market. Simultaneously, many consumers are increasingly demanding convenience and speed for instant payments from businesses. The industry is experiencing heightened levels of consolidation and partnerships, as payment processing companies strive to bridge the gap between both needs. In July of 2018, BIAS Corp and MyCheck entered into a partnership to better serve their public and private sector clients. BIAS Corp, a global IT systems integrator and Oracle Platinum Partner, plans to use MyCheck’s turnkey payment processing solutions to enable their customers to access these digital services quickly and securely.
Transaction Processing
Select Transaction Processing M&A transactions3
Transaction in focus2
February 26, 2018 - Cotiviti Holdings, Inc. (NYSE: COTV), a leading provider of payment accuracy and analytics-driven solutions focused primarily on the healthcare industry, and VerscendTechnologies, Inc., a portfolio company of Veritas Capital and a leader in data-driven healthcare solutions, announced that they have entered into a definitive agreement whereby Verscend has agreed to acquire Cotiviti for $4.9 billion in cash.
1. BIAS Corporation, “BIAS and MyCheck Team Up,” https://www.prnewswire.com/news-releases/bias-and-mycheck-team-up-to-bring-seamless-secure-cloud-based-mobile-payment-processing-to-the-public-and-private-sector-300678099.html, accessed July 11, 2018.
2. Business Wire, “Veritas Capital-backed Verscend to Acquire Cotiviti for $4.9 Billion,” https://www.businesswire.com/news/home/20180619005755/en/Veritas-Capital-backed-Verscend-Acquire-Cotiviti-4.9-Billion, accessed July 11, 2018.
3. S&P Capital IQ, https://www.capitaliq.com, accessed July 9, 2018, data as of July 9, 2018.
($ in Millions)
Close date Target/Acquiror Target business description
Enterprise
value
("EV")
Convergys Corporation
Concentrix Corporation
Cotiviti Holdings, Inc.
Verscend Technologies, Inc.
Intermedix Corporation
R1 RCM Inc.
Worldpay Group plc
Vantiv, Inc.
Paysafe Group Plc
CVC Capital Partners Ltd.; The Blackstone Group
19.7
December-17 Provides online processing of direct debit, credit card, and
alternative payment services to businesses and individuals
in Europe, North America, and internationally.
4,013.7 3.8 15.1
January-18 Provides payments processing technology and solutions
for merchant customers.
11,527.3 7.5
17.1
May-18 Provides technology-enabled solutions that support and
connect healthcare providers, public health agencies, and
emergency management personnel in the United States.
460.0 2.4 9.6
Pending Provides analytics-driven payment accuracy and spend
management solutions primarily for the healthcare sector
in the United States, Canada, the United Kingdom, and
India.
4,936.6 6.7
EV/
Revenue
EV/
EBITDA
Pending Provides customer management services to
communications and media, technology, financial services,
retail, healthcare, government, travel and hospitality, and
other vertical markets worldwide.
$2,534.0 0.9 x 7.4 x
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 23
Transaction Processing public comparables1
Transaction Processing historical EV/EBITDA multiples2
1. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.2. S&P Capital IQ, https://www.capitaliq.com, accessed July 23, 2018, data as of July 23, 2018.
Return to Table of Contents
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013 2014 2015 2016 2017 2018
Transaction Processing S&P 500 Index
` LTM
Company (Ticker)
% of 52
Week high
LTM
revenue
LTM
EBITDA
EBITDA
margin
Enterprise
value
($ in Millions)
Broadridge Financial Solutions, Inc. (NYSE:BR) 98.6 % $4,355.3 18.0 % $821.7 18.9 % $14,824.4 3.4 x 18.0 x 17.8 x
Cardtronics plc (NasdaqGS:CATM) 76.3 1,486.2 10.8 329.9 22.2 2,092.7 1.4 6.3 N/A
Conduent Incorporated (NYSE:CNDT) 87.1 5,889.0 0.0 700.0 11.9 5,496.4 0.9 7.9 8.0
Euronet Worldwide, Inc. (NasdaqGS:EEFT) 84.7 2,329.6 10.9 403.6 17.3 4,156.8 1.8 10.3 8.5
EVERTEC, Inc. (NYSE:EVTC) 98.9 416.1 4.4 142.6 34.3 2,175.3 5.2 15.3 11.2
Global Payments Inc. (NYSE:GPN) 97.9 3,850.4 0.0 1,160.7 30.1 22,597.5 5.9 19.5 15.8
Jack Henry & Associates, Inc. (NasdaqGS:JKHY) 99.2 1,503.1 6.7 470.2 31.3 10,552.7 7.0 22.4 19.2
Mastercard Incorporated (NYSE:MA) 98.7 13,343.0 12.0 7,697.0 57.7 214,099.3 16.0 27.8 23.4
PayPal Holdings, Inc. (NasdaqGS:PYPL) 96.6 13,804.0 18.5 2,645.0 19.2 94,349.7 6.8 35.7 22.4
The Western Union Company (NYSE:WU) 91.0 5,611.3 0.2 1,313.5 23.4 11,551.1 2.1 8.8 8.2
Total System Services, Inc. (NYSE:TSS) 98.0 4,730.4 23.4 1,015.5 21.5 20,104.1 4.2 19.8 14.7
Visa Inc. (NYSE:V) 99.0 19,355.0 13.7 13,193.0 68.2 326,169.4 16.9 24.7 21.2
Worldpay, Inc. (NYSE:WP) 99.8 3,949.0 12.9 1,000.5 25.3 34,307.3 8.7 34.3 17.9
WEX Inc. (NYSE:WEX) 98.8 1,314.0 16.2 459.3 35.0 10,524.1 8.0 22.9 16.5
Median 98.3 % $4,152.1 11.5 % $911.1 24.4 % $13,187.7 5.5 x 19.6 x 16.5 x
Mean 94.6 % 10.6 % 29.7 % 6.3 x 19.6 x 15.7 x
NTM
EV/
EBITDA
EV/
Revenue
EV/
EBITDA
Revenue
CAGR (3 Yr)
Quarterly update | Q2 2018 | Business Services
www.investmentbanking.deloitte.com | Page 24
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